|
|
| |
| Joint Location- Inventory Model for Petrol Stations Under Stochastic Demand |
Kizito P. Mubiru, Christopher Senfuka, Maureen N. Ssempijja
|
Abstract:
We consider a joint location inventory replenishment problem involving a chain of petrol stations at designated locations. Associated with each petrol station is stochastic stationary demand; where inventory replenishment periods are uniformly fixed over the fuel stations. Considering inventory positions of the petrol station chain, we formulate a finite state Markov decision process model where states of a Markov chain represent possible states of demand for diesel product. The unit replenishment cost, shortage cost, demand and inventory positions are used to generate the total inventory cost matrix; representing the long run measure of performance for the Markov decision process problem. The problem is to determine for each petrol station at a specific location an optimal replenishment policy so that the long run inventory costs are minimized for the given state of demand. The decisions of replenishing versus not replenishing at a given location are made using dynamic programming over e finite period planning horizon. We test the model using data from two petrol station locations. The model demonstrates the existence of an optimal state-dependent replenishment policy and inventory costs for two selected petrol station locations.
|
|
|
| | |